Updated: March 31, 2014
The best credit cards for college students hold one major advantage over the other sources of funding that can be used to pay for college expenses: Student credit cards help students establish credit while other methods of funding do not.
Sure, you can give your kid a prepaid debit card and fill it up occasionally, but they won’t learn the responsibility of paying bills on time. They will have no understanding of credit because it will have no impact on them. They’re certainly not going to earn many (if any) rewards or cash back for purchases, like they would if they owned one of the best student credit cards.
Imagine coming out of college with zero credit history. Renting an apartment, buying a car, or even getting a normal rewards credit card would be nearly impossible.
Knowing that the proper use of student credit cards is a good thing, I did the research to find the best credit cards for students. After I finished analyzing the top cards, one stood out above the rest:
Discover it® for Students is the best credit card for college students.
8 Reasons Why Discover it® for Students is the Best
Earn 5% Cash Back
You earn 5% cash back on categories that change throughout the year. The only other student credit card that offers 5% cash back is the Citi®Dividend Platinum Select® Visa®Card For College Students. However, that card is missing many of the top features the Discover it® for Students has to offer. The 5% cash back categories for the Discover it® card include Restaurants & Movies (January – March), Home Improvement Stores and More (April – June), Summer Break deals (July – September), and Holiday Shopping (October – December).
One of the major benefits of owning a student credit card is understanding your own credit. Of all the best credit cards for students, no card is better than the Discover it® for Students card. Every cardholder receives a free FICO® Credit Score on every monthly statement to keep an eye on their credit.
With the Discover it® for Students card, you can log in to your online account to find charts illustrating the types of items purchased and how much you spend on average.
Great Customer Service
Discover offers 24/7 customer service based in the U.S. so you can get help at anytime. Many of the past and present cardholders have commented on how great the customer service and support is from Discover. It’s an important aspect of a student credit card that shouldn’t be overlooked.
Compared to some of the other best student credit cards, the Discover it® for Students is by far the most forgiving. First off, paying late won’t raise your APR. The only other top student card that has that claim is the U.S. Bank College Visa® Card. Second, you won’t be charged a late fee on your first late payment, which is something unique to the Discover it® for Students card.
Additionally, the Purchase Intro APR is 0% for six-plus months to provide a student ample time to “practice” responsible card use, making sure they pay off the full balance on time without paying interest. Students should get in the habit of never carrying a balance, but mistakes happen. Having the six months of 0% interest in addition to the forgiving terms should give the cardholder plenty of time to adjust to owning a credit card.
No Additional Fees or Liability
The card is also great for students who may be traveling abroad. There are no foreign transaction fees, which can sometimes be higher than 3%. There’s also no overlimit fee, meaning you won’t be charged if you go beyond your credit limit by mistake.
Discover also offers $0 fraud liability so you won’t be responsible for any fraudulent transactions made on the account. There’s no need to worry if the card is stolen or lost (this happens sometimes to college students).
No Annual Fee
Just about any student credit card will not have an annual fee, but it’s worth pointing out that the Discover it® for Students doesn’t have one either. When you consider all the rewards and benefits, it’s almost surprising that it doesn’t have an annual fee.
College students haven’t had the time to build a robust credit score. The card accepts credit scores in the 600 range if you proof of income, otherwise you can have a parent co-sign. The average credit score approved for the card is 672 and the lowest credit score approved for the card is 629 (as of January 2014), indicating it’s not too difficult to get accepted.
Based on the customer reviews on Discover.com, students who use this card are thrilled with it. Again, many cardholders comment on how excellent the customer service is. Other people comment on how much they learned. One cardholder noted, “This was my first credit card, and it has taught me so much. They start you out with a reasonable limit and the benefits are awesome.”
Comparing the Rest of the Best Credit Cards for College Students
The chart below was taken from Discover.com. It illustrates a solid comparison of the Discover it® for Students vs. some of the other best credit cards for students.
3 Other Student Credit Cards Worth Considering
While I don’t recommend getting any of the cards I mention here over the Discover it® for Students, I felt it was only fair to present the other options. I’ll also explain why these cards are not the best. (Only one of three cards I mention below is not included in the Discover comparison chart above.)
Citi® Dividend Platinum Select® Visa® Card for College Students
- Build credit while earning cash back fast
- Earn 5% cash back every quarter in must-have categories like department stores, travel and more, enrollment each quarter is quick and easy
- Earn 1% cash back on all other purchases
- Choose your payment due date
- Manage your account online, on your tablet or on your Smartphone
- No Annual Fee
Why it’s Not the Best
- Paying late your first time will cost you a fee and raise your APR
- No credit reporting
- Foreign transaction fee
Citi Forward® Card for College Students
- Watch your interest rate go down and your ThankYou® Points go up
- 2,500 bonus ThankYou® Points after spending $500 within the first 3 months of cardmembership
- 1 ThankYou® Point for every $1 you spend
- Earn up to 2% Purchase APR reduction, when you make a purchase, stay below your credit limit and pay on time 3 billing periods in a row (0.25% each quarter 8X maximum)
- Earn up to 1,200 bonus ThankYou® Points for paying on time and staying under your credit limit
- Flexible billing options
- No Annual Fee
Why it’s Not the Best
- Rewards earning exists but is below average
- No credit reporting
Journey Student Rewards from Capital One®
- Designed to help students build good credit with responsible use
- Access to your monthly credit score, plus an interactive tracking tool to help monitor your credit
- Customizable text and e-mail alerts to help keep you on track
- Get 1% cash back on all purchases, plus a 25% bonus each month you pay your bill on time
- No annual fee
- $0 Fraud Liability if your card is lost or stolen
Why it’s Not the Best
- No forgiveness for late payments
- No credit reporting
- Only 1% cash back, but there is a 25% monthly bonus
Best Practices for Students
Under the Credit Card Act of 2009, students between ages 18-21 can qualify for a credit card if one of two things happen:
- A parent, guardian, spouse, or another adult is willing to co-sign
- You submit proof of income and financial history proving a full-time income (or even a part-time income that’s sufficient enough to pay the balance each month).
5 Credit Card Tips for College Students
Tip #1: Pay your bills on time, every time
This isn’t something you should take lightly. A late payment can drastically impact your credit score. Making payments on time and establishing a positive historical pattern of paying on time can increase your credit score.
If you make late payments, you’re hurting your credit score and you’re also missing out on the opportunity to build your credit, which is a big swing in the wrong direction.
It’s really easy to set up automatic payments to ensure you never forget to pay. Just make sure the checking account from which you make your payments always carries sufficient funds. If your parents are a co-signer, you can have the payments come from their checking account and then pay them yourself to ensure you’ll never be late. Of course, they’ll have to agree to that!
Tip #2: Spend less than what you can afford
As a first-time credit-card user, it might be easy to view credit as money that is yours, but credit is not your money. Determine your budget and spending needs ahead of time and stick to it. Use a credit card as if it were cash or a debit card to avoid uncomfortable financial positions.
You also don’t want to max out your credit limit each month. According to myFICO, amounts owed on credit accounts determine 30% of your score. When you use a high percentage of your credit, it’s an indication that you’re financially overextended.
Tip #3: Start with one credit card
As a student, your main goal should be to “practice” using a credit card responsibly. You won’t have a need for many credit cards. You should focus on one card and paying that bill on time (and any other bills). Start with the Discover it® for Students — it’s by far the best credit card for students.
When you get out of school and you’re financially independent, you can use your solid credit score to add one of the best rewards credit cards to your wallet. I always recommend the Barclacycard Arrival(TM) World MasterCard® – Earn 2x on All Purchases as the top rewards credit card.
Tip #4: Monitor your credit
One of the main reasons you get a student credit card is to build your credit. So while you’re building it, you might as well monitor it and watch your credit score grow by making payments on time and following the tips I’ve mentioned. The Discover it® for Students card includes a FICO score each month on your statement, which measures your financial credit score. That’s one solid step in the direction of monitoring your credit.
You should also obtain a free copy of each of your three credit reports each year from Experian, TransUnion, and Equifax. The credit reporting agencies are required by law to provide you with on free credit report each year. It’s a good habit to get into to make sure all your information is accurate.
Tip #5: Stay away from cash advances
You have to pay a fee of what is usually $10 or 5% of the amount you take out (whichever is greater) for a cash advance. Also, cash advances can get people into some serious financial trouble and end up damaging your credit. APRs on cash advance fees are extremely high, sometimes upwards of 25%. So you take some cash out on advance, you can’t pay it back, the APR starts increasing the amount you owe, and before you know it you have a massive credit card bill that you can’t pay and your credit is ruined.
The Best Credit Cards for College Students Teach Financial Responsibility
The Discover it® for Students is the perfect card for any college student. It helps monitor credit, accumulates rewards, forgives errors, builds your credit, and teaches financial responsibility.
- Fair. No annual fee. No overlimit fee. No foreign transaction fee. No late fee on your first late payment. And paying late won’t increase your APR.*
- Generous. 5% cash back at Home Improvement Stores, Furniture Stores and Bed Bath & Beyond® on up to $1,500 in purchases from April through June 2014.
- Human. Talk to a real person any time with 100% U.S.-based service.
- Safe. Because you’re never responsible for unauthorized purchases with our $0 Fraud Liability Guarantee.
- Plus, free FICO® Credit Score on your monthly statement to help you stay on top of your credit.*
- 0% intro APR* on purchases for 6 months, then the standard variable purchase APR of 12.99% – 21.99%.*
If you’re a parent who is looking to maximize credit card rewards, another option is to get a regular rewards credit card and then put your son or daughter on account with their own card. I wrote a series of posts that highlight the best rewards credit cards. That would be a good place to start if you’re interested.